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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

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January 19, 2009

Clive Cook's piece in the Financial Times spells out what the Obama administration needs to do to address the US economy’s perilous condition:

Here is what needs to be done, starting in 2011, but to be announced and enacted as soon as possible. First, raise the retirement age. Second, phase out income tax relief on new mortgage loans. Third, introduce a carbon tax. Fourth, introduce a national value added tax, tied to healthcare reform.

There is lots of advice being offered to the apostle of hope filling those presidential shoes:

PinnI.jpg Meanwhile, the Republican's have lots of fears about the Democrats ramming the liberal agenda through Congress, as they celebrate Bush's achievements.

Cook's advice implies sacrifice by the American people and the Obama administration ensuring that the short-term stimulus will not be too small and the long-term structural consolidation is not too slow. Cook, however, fails to mention the need to reform the financial system that keeps capital flowing through the economy. That means doing something about the "bad banks"---those with heaps of toxic assets.

That means addressing Wall Street's power in Washington. As Robert Reich points out:

The first $350 billion bailout of Wall Street -- so-called "TARP I"---did not go to small businesses, struggling homeowners, students, or anyone else needing credit, which was the major public justification for the bailout. In all likelihood, on the basis of the skimpy evidence we now have, the money went instead to bank shareholders in the form of dividends; to bank executives, traders, and directors as compensation (directors of major Wall Street banks continued to pull down an average of $350K each in 2008 merely for sitting in on a handful of board meetings at which they obviously didn't oversee very much); to some holders of bank debt; and to platoons of lawyers, accountants, and other financiers who have advised the banks about other places to park the rest of the money in the meantime.

Wall Street is back for more bailout money--an additional $350 billion the second tranche of the Bush bailout.

| Posted by Gary Sauer-Thompson at 6:07 AM |